When you sell your house, it’s go-go-go. Paint this wall, call that contractor, rush to clean up before a showing. And then you get an offer. While the buyer is working out details with their lender, it’s uncomfortably quiet on your end. One big thing you’re waiting on is the home appraisal and the results from the appraisal report, which will determine whether the deal moves forward as planned and (unfortunately) won’t come in until the 11th hour.
The anticipation of the appraisal can lead to some nervous energy and, to be honest, wasted efforts on your end. You wouldn’t be the first person who tried to skew the appraisal higher with marketing ploys or sweet-talking the appraiser to no avail. So ditch the fresh-baked cookies and annoying hard-sell, and follow these tips for what to do when you get your house appraised instead. Because this advice? It comes from actual appraisers and top real estate agents in the field who know what works.
Address the appraisal in the contract negotiations
As of January 2020, appraisal issues accounted for 18% of real estate settlement delays, according to transaction data from the National Association of Realtors (NAR). During any given month, a certain percentage of buyers and sellers will face a tough reality: The home in question appraised below the contract value. No matter how confident you are that it won’t happen to you, it’s smart to have a plan in the event that it does.
“If we have multiple offers, I can sometimes get the home appraisal contingency waived, or waive it for the amount that is over list price,” says top-ranking agent Kristie Smith of Indianapolis, Indiana. “I’ll share the best terms for the seller with the buyers so they can create a highest-and-best offer. Even if the home does not appraise based on an appraiser’s opinion, we’ve established that the buyer will bring the deficient funds if we have an appraisal issue.”
Removing or changing appraisal-related contingencies to your offer agreement is a way for both the buyer and seller to agree on the path forward if the home doesn’t appraise at contract value. It clarifies the journey, especially in cases of multiple offers that drive prices up, so that no one is left weeks or months into the process without knowing what will happen next.
Put an appraisal into context with your own market research
You won’t always have the luxury of waiving the appraisal contingency. 76% of real estate contracts contain contingencies, and the appraisal is the second most common contingency at 43%, according to NAR data. Some buyers will insist that you include it. So, in that case, you’ll want to understand where a home appraiser is coming from, and why your home’s value is not static.
Woody Fincham, a well-regarded residential property appraiser from Accurity Valuation in Charlottesville, VA who won the 2017 Outstanding Service Award from the Appraisal Institute, says that homeowners see a snapshot as if it is the entire picture.
“For instance, if you add a swimming pool that costs $50,000, homeowners expect that cost is equal to value,” says Fincham. “The contributory value from the market’s perspective is much less. Oftentimes, homeowners will react to the number and not read the report, which can be problematic. A properly written appraisal is not an arbitrary number; It’s a result of a whole lot of research.”
So when you think about your listing price and your expected valuation alongside your agent, do as much research into factors that affect price and value as you can. If you have reasons to doubt whether your comparables are really comparable, consider hiring your own appraiser to do a valuation before you even put your home on the market: It gives you an independent expert’s perspective.
“If you are going to spend any substantial money on your property and you’re concerned about value, get an appraisal before you add the improvements,” says Fincham. “You can hire an appraiser yourself, not just for a mortgage transaction. It can prevent you from being forced to sell at some point without being able to recuperate your investment: you spend $500 now and maybe save $20,000 long-term.”
Maybe you’ve already invested in home updates. You can still get your own prelisting appraisal before the lender’s appraiser comes. Often, however, your agent’s comparative market analysis (CMA) will serve this purpose, so weigh the decision to get a separate home appraisal carefully because you will be the one paying for it.
Work with your agent to put together a home fact sheet, but don’t act like you’re in sales
While your home appraiser aims to be objective, they don’t know every little detail about your house, its history, or the surrounding area. Especially with the rise in automated appraisal assignments through management software, appraisers may be most familiar with a different neighborhood and totally different kind of housing than yours.
“You can’t assume your appraiser knows anything about your neighborhood or your property type because they can be traveling from a great distance, not from your niche market,” says Smith. “It’s important to have a one-page sheet that is bulleted with all the features of the home that they may not know. It should be a marketing flyer but should not tell them how to do their job.”
So draw up a fact sheet (it can be paper or digital) to list out top home improvements you’ve made, information on schools and walkability, and some suggested comparable homes. These details offer the home appraiser insight into the many variables that go into calculating your home’s value.
That being said, your delivery matters. Make sure your fact sheet is about sharing information, not part of a hard-sell on the value of the property. Pressure, especially in-person, is uncomfortable for you and for the appraiser since your appraiser isn’t working for you. Appraisers, like Fincham, don’t want their perspective to be warped.
“I’ve had people say ‘I’ve got to get such-and-such out of the property,’ and they want to know what the value is right then,” says Fincham.
“No appraiser can or should answer that question on the spot; In general, some appraisers would prefer if you just don’t talk to them about values.”
Their client, after all, is your buyer’s lender, but their goal of an accurate appraisal really helps the buyer too, by making sure that their investment will hold up in the market. You’re better off letting the qualities of the property speak for themselves in the fact sheet. When in doubt, avoid these 10 questions and phrases in your conversations with appraisers.
Prepare the house for this important guest, but avoid gimmicks
You’ll see a lot of tips out there for acing the appraisal like: “Put out a plate of fresh-baked cookies!” However, appraisers are not to be “bribed” with baked goods.
Focus on common-sense preparations. Make sure the front yard looks neat and tidy (appraisers will take curb appeal into account, at least qualitatively), and secure or remove your pets. Don’t go overboard with lawn maintenance though: Water the lawn right before an appraisal, for instance, and the appraiser will have to walk around to take measurements in the mud.
Last-minute home prep isn’t going to swing your valuation massively one way or another, but making sure that your home is clean and easy to navigate does make it possible for the appraiser to do the job-at-hand.
“There’s some psychology to the process; I like to believe I’m absolutely objective, but we are susceptible to bias even when it isn’t intentional,” says Fincham. “There’s truth to the fact that, if your home is inviting and you are pleasant, the appraiser walks away with a positive experience.”
The point isn’t about changing the fundamental valuation though. Rather, an uninviting or cluttered home calls into question a commitment to routine maintenance and attention to detail. Help the appraiser focus on your home’s many assets rather than its flaws.
Leave the house for the appraisal
While some homeowners stick around for the appraisal, no one likes feeling followed and pressured while they do their work. It’s usually best to leave the home during the appraisal.
“I do not think the seller can be there; You don’t know the personalities,” says Smith. “The seller can get overzealous and the appraiser can take it the wrong way.”
However, it’s a good idea for your agent to be there. He or she can answer questions about your house such as “Was this garage permitted?” and “Are the solar panels leased or owned?”
If you fear that the appraiser will miss a critical feature or detail, remember your fact sheet or packet. Your agent can send it over digitally via email for easy access, and having it handy in the home in a physical form allows your appraiser to look for specific updates you mention and evaluate them according to standard criteria.
Lean on your agent to navigate any appraisal hiccups
No matter how much you prep, the reality is that occasionally, the circumstances of an appraisal are out of your control. The changes in your neighborhood, the inventory on the market, and fluctuations in demand are all going to have an impact on what your home is worth right at the moment of sale.
While the process can be stressful, the agent you choose has a network of connections in the community and can be your guide through the many potential circumstances you face.
“A couple of times, an appraiser has called me before submitting the appraisal and said, ‘I’m not coming up with any value like what you have on this house — is there anything I’m missing?’ I pulled together everything I knew about the house and the neighborhood, the comparables I used and why,” says Smith.
“If I wasn’t who I was and if I didn’t have my reputation in my community, I wouldn’t get that kind of call. Who you choose as an agent matters.”
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